Photo: The central head office of Russia's Sberbank in Moscow, Russian Federation on July 1, 2012. Shutterstock

Islamic Finance

Russia’s biggest bank eyes Islamic finance as it opens Abu Dhabi office

The largest commercial bank in Russia, Central and Eastern Europe is on course to open an office in Abu Dhabi by the end of this year. Sberbank told Salaam Gateway Islamic finance is a key part of its offering in the region.

Sberbank is looking to promote investment activity by implementing its clients’ projects in both conventional and Islamic finance through cooperation with funds, financial institutions and other bodies in the Middle East.

In late September, the state-owned bank signed an agreement with Abu Dhabi sovereign investor Mubadala Investment Company to “explore opportunities of mutual benefits”.

The agreement covers cooperation in areas including co-investments, debt and equity financing, long-term financing of Mubadala projects in Russia and other territories. It also includes the potential cooperation and investments in a broad range of areas including Islamic finance, artificial intelligence, cybersecurity, life sciences, venture capital, telemedicine and education.

In an exclusive interview with Salaam Gateway, Behnam Gurban-Zade, head of Islamic banking at Sberbank said the lender has been issued an In-Principle Approval by the Financial Services Regulatory Authority of the Abu Dhabi Global Markets. 

“However this approval does not give us the right to operate until we fulfil certain conditions,” he explained.  “We are currently working on fulfilling these conditions and hope to obtain our final authorization from the ADGM regulator and open an office in Abu Dhabi in the coming few months.”

Gurban-Zade himself will be based out of the Abu Dhabi office that will be staffed to meet the regulator’s requirements.

“Initially this presence will be relatively limited with support from our operations in Russia,” he said.  “Over time our staffing will be done based on our performance and the growth of our business.”


Islamic finance will be a key component of the Russian bank’s business activity in the region, stressed Gurban-Zade.

“Sber Investment Middle East (SIME) is planning to use the comfortable legal environment of the Abu Dhabi Global Markets for developing Islamic financing business,” he said.

“We believe that Abu Dhabi is perfectly suited to meet our goals in the region.”

The Islamic window within SIME will be a single product development center and the office for Sber’s Shariah-compliant finance business.

“At initial stage we are offering advising and consultancy in deals structuring and products development,” said Gurban-Zade. “We [will] also consider arranging trade financing and direct investments and acquisitions.”

He noted that Sber is a global company with diversified activities.

“We will target markets with potential business activities and demand for Islamic financing,” said the head of Islamic banking. “We will be focusing on corporate business. The main areas of interest are export-import financing, fintech, M&A deals, direct investments and sukuk.”

Adding to their activities for clients, Gurban-Zade said the lender is evaluating its own sukuk issuance. “We are considering sukuk both in Russian Rubbles and foreign currencies,” he said. “It depends on the structure and the underlying assets. The size and timing are under consideration.”

Digitalization is also a priority.

“First of all, we are planning to present companies from the ecosystem of Sber in the region and of course to examine local opportunities,” explained Gurban-Zade.  “Our concept of a whole ecosystem of digital services is much broader and more client-oriented than just fintech.”

That being said, the bank acquired a 25% stake in digital platform PayZakat in June 2019. The Moscow-based platform collects, distributes, and monitors zakat. It won the bank’s first in-house corporate accelerator Sber#Up in 2018.


Russia’s Muslim population is around 10% to 15% of the country’s population of 142 million, according to various estimates.

Despite a sizeable and growing domestic Muslim population, the Islamic finance industry remains in infancy.

Nevertheless, Sber has been developing Islamic financing since 2016, said Gurban-Zade.

“There is a lack of legal and regulatory landscape for Islamic finance in the Russian Federation, which puts a considerable strain on the development of Islamic banking products and services in the market,” he said.

The Sberbank team is testing plain vanilla Islamic finance products within existing legal frames.

“At the same time, we have representatives in the committees in the Central Bank and the State Duma, the lower house of the Russian parliament,” he said. “We face the willingness of the State Duma and the Central Bank to accommodate Islamic finance in the Russian Federation.”

To date, the bank has structured seven Shariah-compliant deals totalling $300 million.

Among the most notable was the trade finance deal in August of this year that involved the International Islamic Trade Finance Corporation, a member of the Islamic Development Bank Group. It was implemented through Sberbank’s subsidiary in Switzerland that has commodity trade finance at the core of its operations. Egypt’s General Authority for Supply Commodities, a long-term customer of the bank and a major trader of agricultural products, acted as the buyer.


Sber also plans to facilitate business relations between UAE and Russia, according to Gurban-Zade.

“Using our client base and financing products we will be also focusing on increasing the volumes of export-import operations between the two countries,” he said. “New development areas to be explored could include commodity trading, food security and agriculture products.”

Sber will also consult Russian companies for Russian food exports to UAE that require halal certification, said Gurban-Zade.

(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim [email protected])

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